P311 LO7 Cash and Accrual Basis On January 1 2017 Norma Smit

P3-11 (LO7) (Cash and Accrual Basis) On January 1, 2017, Norma Smith and Grant Wood formed a computer sales and y in Soapsville, Arkansas, by investing $90,000 cash. The new company, Arkansas Sales and Service, has the fol- 071 lowing transactions during January 1. Pays $6,000 in advance for 3 months\' rent 2. Purchases 40 personal computers at a cost of office, showroom, and repair space. of $1,500 each, 6 graphics computers at a cost of $2.500 each, and 25 printers at a cost of $300 each, paying cash upon delivery

Solution

Workings

Balance Sheet
Assets	Cash Basis	Accrual Basis
Cash	58500	58500
Accounts Receivable		23400
Inventory		23000
Prepaid rent		4000
Total assets	58500	108900
Liabilites and Owners’ Equity
Accounts payable		2000
Salaries payable		3000
Owners’ equity	58500	103900
Liabilites and Owners’ Equity	58500	108900